IDEAS home Printed from
   My bibliography  Save this article

India's International Reserves: How Large and How Diversified?


  • Rajan Ramkishen S

    () (George Mason University and Institute of South East Asian Studies)

  • Gopalan Sasidaran

    () (George Mason University)


Asymmetric foreign exchange intervention by the Reserve Bank of India (RBI) has resulted in a sustained accretion of Indias foreign exchange reserves. The reserve buildup in India has certainly been impressive, rising from around US$5-6 million in 1991, to nearly US$300 billion in mid 2008. In addition to addressing the issues of reserve adequacy, this paper examines the forms the reserves have taken (asset and currency composition), and the extent to which Indias reserve holdings are diversified.The issue of reserve adequacy was made apparent during the 1990s and early 2000 when rapid reserve depletion became a defining and determining feature of the series of currency crises that hit emerging economies. In order to assess the adequacy of Indias stock of international reserves, the paper considers a few standard measures used in literature and finds that Indias reserve stock is more than adequate, placing them in a much better position than many other emerging economies.The paper goes on to examine the asset and currency composition of such reserves. More than 50 percent of Indias reserve holdings have been in the form of foreign currencies and deposits as cash, followed by investments in foreign securities and gold deposits, in that order, reflecting a high degree of risk aversion by the RBI in the management of the reserves.While data on asset composition are available, the currency composition of reserves is a well-guarded secret. Hence the paper undertakes some simulation exercises to arrive at some reasonable guesstimates of such a composition. The paper also makes use of the Treasury International Capital Reporting System (TIC) data to track Indias investments in the U.S. securities, thereby assessing the weight of U.S. dollar assets in Indias reserve holdings.

Suggested Citation

  • Rajan Ramkishen S & Gopalan Sasidaran, 2010. "India's International Reserves: How Large and How Diversified?," Global Economy Journal, De Gruyter, vol. 10(3), pages 1-18, October.
  • Handle: RePEc:bpj:glecon:v:10:y:2010:i:3:n:6

    Download full text from publisher

    File URL:
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Graham Bird & Ramkishen Rajan, 2003. "Too Much of a Good Thing? The Adequacy of International Reserves in the Aftermath of Crises," The World Economy, Wiley Blackwell, vol. 26(6), pages 873-891, June.
    2. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    3. Rajan, Ramkishen, 2009. "Monetary, Investment, and Trade Issues in India," OUP Catalogue, Oxford University Press, number 9780195699951.
    4. Ramachandran, M. & Srinivasan, Naveen, 2007. "Asymmetric exchange rate intervention and international reserve accumulation in India," Economics Letters, Elsevier, vol. 94(2), pages 259-265, February.
    5. Christian B. Mulder & Matthieu Bussière, 1999. "External Vulnerability in Emerging Market Economies; How High Liquidity Can Offset Weak Fundamentals and the Effects of Contagion," IMF Working Papers 99/88, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Sen Gupta Abhijit & Manjhi Ganesh, 2012. "Negotiating the Trilemma: The Indian Experience," Global Economy Journal, De Gruyter, vol. 12(1), pages 1-21, March.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:glecon:v:10:y:2010:i:3:n:6. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.